Arbeitspapier

An adverse selection model of optimal unemployment insurance

We derive the shape of optimal unemployment insurance (UI) contracts when agents can exert search effort but face different search costs and have private information about their type. We derive a recursive solution of our dynamic adverse selection problem with repeated moral hazard. Conditions under which the UI agency should always offer separating contracts are identified. We show that the good searcher receives an information rent and that the bad searcher receives the minimal entitlement. From a methodological point of view, we achieve a precise characterization of the sets of jointly feasible entitlements. This allows us to map our analytical results one-toone to a numerical algorithm. According to our results the contract for the good searcher has a decreasing benefit profile, as the one he would be offered in a pure moral hazard environment. In contrast, the contract of the bad searcher is distorted by an adverse selection effect, so that it tends to have an upward-sloping benefit profile. We provide a comparative static analysis of changes in various parameters of our model.

Sprache
Englisch

Erschienen in
Series: ZEI Working Paper ; No. B 30-2002

Klassifikation
Wirtschaft
Unemployment Insurance; Severance Pay; Plant Closings
Unemployment: Models, Duration, Incidence, and Job Search
Asymmetric and Private Information; Mechanism Design
Optimization Techniques; Programming Models; Dynamic Analysis
Policy Objectives; Policy Designs and Consistency; Policy Coordination
Thema
Unemployment Insurance
Adverse Selection
Moral Hazard
Arbeitslosenversicherung
Anreizvertrag
Arbeitsuche
Adverse Selection
Moral Hazard
Theorie

Ereignis
Geistige Schöpfung
(wer)
Hagedorn, Marcus
Kaul, Ashok
Mennel, Tim
Ereignis
Veröffentlichung
(wer)
Rheinische Friedrich-Wilhelms-Universität Bonn, Zentrum für Europäische Integrationsforschung (ZEI)
(wo)
Bonn
(wann)
2002

Handle
Letzte Aktualisierung
10.03.2025, 11:41 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Hagedorn, Marcus
  • Kaul, Ashok
  • Mennel, Tim
  • Rheinische Friedrich-Wilhelms-Universität Bonn, Zentrum für Europäische Integrationsforschung (ZEI)

Entstanden

  • 2002

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